Changes in Real Estate 2019 for Mortgage Originators

Last week, we talked about the effects of the government shutdown on the mortgage industry. This week we’re taking an overall look at real estate trends for 2019 — particularly where mortgage brokers can find opportunities and how you can prepare for growth in this 2019 market.

After several years of a “seller’s market,” we’re finally going to see a shift toward a “buyer’s market.” But unlike the past, attitudes and tech are changing how this buyer’s, or borrower’s market is going to play out. Here’s why:

Home Prices Will Continue Rising But At A Much Slower Rate

This is a real sweet spot, psychologically anyway, for both sellers and buyers. Sellers will see their equity growing, giving them confidence in their investment, which may make more willing to refinance despite the higher rates. More on that below.

Meanwhile, buyers/borrowers will see the climbing home prices as “steadying.” A spike in home prices can unnerve potential borrowers and make them back out, thinking they’ve missed their opportunity to buy. But a slowly rising trend puts those nerves on ice while urging to buy now before prices go any higher.

Higher Rates May Actually Be A Good Thing For Borrowers

There are two points you really want to drive home with your potential borrowers when it comes to the higher rates:

1. Although the rates have risen these past months, historically, they’re still low. Some predict lower rates soon, but with unemployment down and equity gains also slowing, it’s more likely that rates will continue to rise. Better to lock in the rate now before they get much higher.
2. These higher rates are making investors hold off on purchasing. This means less competition for your borrower!

Most 2019 Borrowers Will Be Millennials

Millennials are finally coming of age both in their finances and career! Pairing that with Baby Boomers that are likely downsizing for retirement, you can see how the borrow’s market is perfectly positioned for Millennials.

Traditional lending tactics won’t work with Millennials! 2018 proved to be a defining year for many mid-size to small lenders, forcing them to looking into adapting digital mortgage tech. For Millennials, tech is foundational to, well, EVERYTHING.

From shopping to scheduling appointments, from online banking to social media networking, video conferencing to managing their business and personal affairs, technology is what makes the Millennial’s world turn.

Expecting a Millennial to fill out a paper 1003, swing by your office to drop off docs, or even to fax is asking too much. In fact, you’ll likely lose that Millennial borrower (with an average household income of $88k, by the way) to another broker that allows them to do it all from their mobile device.

Going Beyond the Real Estate and Mortgage Tech

Before you sign up for any and all digital mortgage tech, keep these things in mind:

• While Millennials are tech savvy, they prefer low-effort and uncomplicated. When choosing which tools to add to your lending business, get only what you need for YOUR BUSINESS and YOUR BORROWERS.
• Promote your business with branding. Tech has made it incredibly easy to share recommendations and reviews, and Millennials are eager to post. Make sure your mortgage tech is your brand from start to finish. That way, all credit about the ease and great experience applying for a loan goes to you, not the mortgage tech company.
• Relationships still matter –maybe even more. Mortgage tech is about making things easier, not about taking out the human element. Borrowers still want the ability to connect with a broker directly and they want to know that a professional is personally overseeing the loan application process. Even if all communication is done electronically, borrowers still want mortgage professional seeing to the details and keeping them in the know.

Are you ready for 2019 real estate trends? Are you ready for the surge of Millennial home buyers? If not, or if you’d like to learn more about our stackable digital mortgage tools, contact us and schedule a demo.